A street vendor sells face masks outside the central railway station in Milan

ROME (Reuters) – Italy’s economy shrank by 4.7% in the first quarter from the previous three months, preliminary data showed on Thursday, as activity plunged in March due to a nationwide lockdown to try to curb the coronavirus.

The quarterly fall in gross domestic product in the euro zone’s third largest economy was the steepest since the current series began in 1995, national statistics bureau ISTAT reported.

It leaves the country officially in recession following a 0.3% decline in the fourth quarter of last year.

On a year-on-year basis, first quarter GDP was down 4.8%, ISTAT said, following a 0.1% rise at the end of 2019.

Analysts had expected an even steeper contraction. A Reuters survey of 27 economists had forecast a 5.0% quarterly fall, down 5.1% from the year earlier.

Italy has recorded more than 27,000 fatalities from COVID-19 since its outbreak emerged on Feb. 21, the second highest death toll in the world after that of the United States.

The country has been in lockdown since March 9, with most businesses shuttered and people allowed to leave their homes only for essential needs.

With contagion on a downward trend in recent weeks, the restrictions are due to be eased gradually from May 4, based on local conditions.

ISTAT said both domestic demand and exports had shown marked contractions in the first quarter, along with all the main sub-components of GDP.

It gave no numerical details with its preliminary estimate and said that gathering the necessary information had been hampered by the lockdown.

The government of the anti-establishment 5-Star Movement and the centre-left Democratic Party last week forecast a full-year 2020 GDP contraction of 8.0%.

In its annual economic and public finance targeting exercise it projected a quarterly GDP fall of 5.5% in the first quarter and a steeper drop of 10.5% between April and June.

The steep recession and the government’s extra spending to soften its impact will hit Rome’s public finances.

Credit rating agency Fitch on Tuesday downgraded Italy’s sovereign debt to BBB-minus, just one notch above junk, citing the steep rise in its budget deficit and debt ratios expected this year.

In a situation of extreme uncertainty, Italian GDP forecasts for this year vary widely, with investment bank Goldman Sachs among the most pessimistic, projecting a fall of 11.6%.